Robert Carlucci, 69, and William Carlucci, 69, both of Florham Park, N.J., pleaded guilty before U.S. Magistrate Judge Michael A. Hammer to separate informations charging them with conspiring to commit health care fraud.

According to documents filed in this case and statements made in court:

Robert Carlucci, William Carlucci, and another conspirator (identified as “L.S.” in the charging documents) participated in a variety of schemes designed to cheat customers and bilk insurance companies out of at least $1.5 million.

They used a practice they referred to as “TRADE-QUICK” to under-fill prescriptions. Each letter in “TRADE-QUICK” corresponded to a number, beginning with “T” for “1” through “K” for “0.” The conspirators would enter a two-letter code into the West Orange Pharmacy computer system that indicated how much of the prescription they intended to fill. The code “QK” indicated that a prescription for 90 dosage units would instead be filled with 60 dosage units, because the “Q” stood for the number “6” and the “K” stood for the number “0.” After under-filling the prescription, the co-conspirators billed Medicaid and other insurance companies for the fully filled prescription.

Without informing the patients, the conspirators substituted generic drugs for the brand-name drugs prescribed by the patients’ physicians. Then they billed Medicaid and other insurance companies for the full amount of the brand-name drugs. The co-conspirators entered the prescribing physicians’ phone numbers into the West Orange Pharmacy computer system as a code to indicate that they were utilizing this particular scheme.

The conspirators also filled outstanding refills on a given prescription without the patients’ knowledge and then billed Medicaid and the private insurers for the refills. They entered a dot (“.”) into the West Orange Pharmacy computer system as a code to indicate that they were utilizing this particular scheme.

The conspirators would sometimes lose money on a given prescription. On those occasions, they looked through a patient’s profile and found additional costs that they could pass on to Medicaid and other insurance companies. They would submit bills for these additional costs, and they would enter the code “COV” into the West Orange Pharmacy computer system to reflect this scheme.

The conspirators purchased prescription drugs back from their customers and would reuse those drugs to fill other patient prescriptions. They billed Medicaid and other insurance companies for the full amount of the filled prescriptions.

The conspirators purchased prescription drugs from non-licensed wholesalers at a substantial discount to the drugs’ wholesale price, then dispensed these discounted drugs to patients and billed Medicaid and private insurers for the full costs associated with the drugs.

The health care fraud conspiracy charge to which Robert Carlucci and William Carlucci pleaded guilty is punishable by a maximum potential penalty of 10 years in prison and a fine of $250,000 or twice the gross gain or loss from the scheme. As part of their guilty pleas, the defendants are agreeing to pay restitution of $1.5 million. Additionally, Robert Carlucci is forfeiting $849,568 and William Carlucci is forfeiting $558,717. Sentencing for both is scheduled for Nov. 12, 2013.

U.S. Attorney Fishman credited special agents of the DEA, under the direction of Special Agent in Charge Carl Kotowski; and special agents of the Food & Drug Administration’s Office of Criminal Investigations, under the direction of Mark Dragonetti, with the investigation leading to today’s guilty pleas. He also thanked the Elizabeth, Clinton, Toms River, West Orange, and Marlboro Police Departments, along with the Essex County Sheriff’s Department for their work on this case.

The government is represented by Assistant U.S. Attorney Rahul Agarwal of the U.S. Attorney’s Office Criminal Division in Newark.